When the first Mexican truck in a new cross-border trucking pilot project rolls into the U.S., it will bring an end to punitive Mexican tariffs on U.S. goods.
It won’t stop debate, however, over giving Mexican trucks greater access to U.S. highways, or the impact of that decision.
There was widespread belief the July 6 agreement between the U.S. and Mexico on trucking and tariffs resolved the trade dispute, but opponents of the Obama administration’s three-year pilot project almost certainly will try to kill it.
The Owner-Operator Independent Drivers Association petitioned the U.S. Court of Appeals in Washington almost immediately to reject the Department of Transportation’s cross-border trucking plan, arguing Transportation Secretary Ray LaHood exceeded his legal authority in crafting a plan that opens a route to permanent U.S. operating authority for Mexican trucking companies.
OOIDA President Jim Johnston accused LaHood of “sneaking down” to Mexico City to sign the “memorandum of understanding” on the trucking program and an agreement that would phase out Mexico’s punitive tariffs.
OOIDA and the Teamsters union are long-standing opponents of a more open border, citing concerns about highway safety, national security and jobs.
Rep. Peter DeFazio, D-Ore., is challenging the new program with legislation that would limit its funding. He wants to block the DOT from using Highway Trust Fund money to install onboard recorders to monitor the movement of Mexican trucks in the program. Those recorders are considered central to the effort to monitor the safety and security of those trucks.
“As we debate deep and harsh cuts to programs that help middle class families, it is outrageous that taxpayers are being told to foot the bill for the Mexican trucking industry to comply with American safety standards,” DeFazio said.
But congressional opposition to granting Mexican truckers limited rights within the U.S. actually is much weaker than it was before the Republicans captured the House in 2010, and before Mexico slapped $2.4 billion in punitive tariffs on certain U.S. exports.
In September 2008, the House voted 395-18 to defund the first cross-border trucking pilot program, launched by the Bush administration in 2007. The program was finally killed by language in the March 2009 omnibus appropriations bill.
This May, however, only 44 representatives, mostly Democrats, signed a letter to LaHood opposing a new cross-border trucking agreement. Business groups hit by the retaliatory tariffs Mexico leveled against the U.S. in 2009, including agriculture shippers from states such as Oregon, have been pressing hard on Capitol Hill for a new program they say will save thousands of jobs.
The U.S. Chamber of Commerce says the Mexican tariffs threaten 25,000 U.S. jobs.
“If we’re going to boost U.S. exports and create jobs here at home, we must hold on to our major export markets, such as Mexico, where American companies are already doing well,” President and CEO Thomas J. Donohue said.
And U.S. companies increasingly are doing well south of the border. U.S.-Mexican surface transportation trade increased 12.4 percent year-over-year in April to $29.1 billion, and trucks handled 81 percent of that traffic ranked by cargo value. The value of U.S. exports to Mexico handled by truck was down 10 percent from March but up 12.7 percent from April 2010, according to the Bureau of Transportation Statistics.
But the start of the program this summer isn’t likely to affect cross-border trade, at least in the short term. “It will be an evolutionary process,” Karen Antebi, an economic counselor at the Mexican Embassy in Washington, told a panel discussion sponsored by the Washington International Trade Association in June. “There will be carriers that will be attracted” to the program, she said, but many won’t be.
The Federal Motor Carrier Safety Administration is concerned the pilot project won’t attract enough Mexican carriers to make it statistically valid as a study. “Probably the largest challenge is participation,” said William Quade, an associate administrator at the FMCSA. Only 29 Mexican carriers with about 100 trucks participated in the Bush-era pilot project.
“There are significant costs for operating within the U.S. for a Mexican carrier,” including insurance costs, regulatory costs and congestion-related costs, Quade said at the June 29 WITA event.
“The biggest challenge for Mexican carriers will be to balance loads in and out of a specific market to make the program work,” said Troy Ryley, director of transportation and distribution for Transplace Mexico, a division of U.S.-based logistics and truckload brokerage company Transplace.
“Mexican carriers will not be allowed to carry U.S. domestic freight, so all international operations must be to and from Mexico,” he said. “We believe this is where they will struggle or incur too many deadhead miles to make them competitive in certain markets. The further they go from the border, the more difficult balancing loads will become.”